Despite reform, state system still costly, arduous


December 27, 1992|By Kim Clark | Kim Clark,Staff Writer

Five years after the Maryland workers' compensation system was reformed to reduce medical and legal squabbling, the disputes are worse than ever -- gumming up resolution of cases and costing workers and employers millions of dollars.

A recently released study of the General Assembly's 1987 reform found that the provision designed to make it easier for injured workers and their employers to agree on the extent of workers' disabilities appears to have failed.

Other parts of the reform package, such as the cuts in benefits to workers with minor permanent injuries, seem to have succeeded, at least temporarily, in another aim -- reducing employers' costs.

And those involved in the system say it still works well in paying initial medical and salary replacement bills for injured workers.

But a study by the Workers Compensation Research Institute (WCRI) confirms widespread reports by injured workers that they must hire an attorney and endure several months of costly delay and quarreling to resolve permanent-disability cases -- even though the workers' compensation system was designed to pay workers for their injuries quickly and with a minimum of legal hassle.

WCRI, based in Cambridge, Mass., found that most of the cost of the squabbling is paid by injured workers, such as James Nowak, a 20-year veteran of the General Motors plant on Broening Highway.

Mr. Nowak underwent two operations and a year of therapy in an attempt to regain strength in his arms. But doctors this fall told him he wouldn't ever get strong enough to return to assembly-line work.

So he asked a GM personnel manager for help in getting a workers' compensation settlement. He said the manager turned his back on him and said: "You have a lawyer, don't you?"

Now, as his new attorney wrangles with GM's during the long wait for a hearing before the state's Workers Compensation Commission, Mr. Nowak is worried. His temporary-disability insurance checks -- the only income he and his wife have -- stopped arriving three weeks ago.

"I'm losing a lot of money. . . . It is not supposed to be this way," the 45-year-old Baltimore native said.

Leslie Boden, author of the WCRI study, said stories like Mr. Nowak's are typical.

"It is clear the workers lose in this system," he said.

But, he added, "Employers suffer. Society suffers. Everybody suffers."

Adversarial climate

Mr. Boden found that the legislature's adoption of strict rules to determine the degree of disability did not promote agreements between workers and employers, or either sides' doctors or attorneys.

In fact, in his study of the state's handling of workers who had suffered permanent injuries on the job, Mr. Boden found that the share of cases in which both sides retained attorneys rose to 98 percent in the two years after the reform, up from 94 percent in 1987.

Attorneys who handle workers' compensation cases insist Mr. Boden is wrong to view a high ratio of attorney involvement as a problem. Lawyers are needed to protect their clients' rights, they say.

But WCRI, which is funded by insurance companies and employers, said the adversarial climate in Maryland is costly and avoidable.

Mr. Boden found:

* The legal disputes cost workers. They end up paying one-fifth of any award -- $1,475 out of the 1992 average permanent partial disability award of $7,267 -- to attorneys and doctors.

* The legal disputes cost employers. The WCRI estimates that about one-third of Maryland employers' premiums that go to permanent partial disability awards and administration -- about $50 million of the total $155 million for 1992 -- is spent on attorneys and witnesses.

* The conflicts cause problems for the state's Workers Compensation Commission. The final resolution of the nearly 18,000 permanent disability claims handled in Maryland this year has become nightmarish, commission staff members say.

In its most recent report to the state legislature, the commission said requests for hearings ballooned by 14,000, to 57,000, in the year that ended June 30. As a result, the commission's backlog was reaching four months, twice what it considers acceptable, and commissioners had been assigned twice their normal caseload.

Although the commission has succeeded in reducing the hearing backlog -- which had reached a year at one point -- the increasing legal conflict is the single biggest problem facing the commission, said its director, Rex Brookshire II.

* Much of the conflict could be avoided. The WCRI said Oregon andWisconsin, for example, have adopted laws that actually discourage antagonism, and have reduced the share of cases involving two lawyers to as few as one-third.

Employers' costs go down

Ironically, the study comes as many insurers and employers have become convinced that the reforms had succeeded in their primary aim: stopping the rapid escalation of workers' compensation premiums.

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